Don't get bogged down in the detailsProper reporting standards for an NI 43-101 Technical Report
Proper reporting standards for an NI 43-101 Technical Report
By Bill Lewis
May 08, 2017
An NI 43-101 Technical Report is an invaluable document for both the reporting issuer and investors. However, these reports often contain too much technical information, which renders them incomprehensible to the untrained reader and less informative to the investing public.
According to the guidelines for NI 43-101 technical reporting, the purpose of the document is “to provide a summary of material scientific and technical information concerning mineral exploration, development, and production activities on a mineral property.” The instructions to authors further state that “the qualified person […] should keep in mind that the intended audience is the investing public and their advisors who […] will not be mining experts. Therefore, to the extent possible, technical reports should be simplified and understandable to a reasonable investor. However, the technical report should include sufficient context and cautionary language to allow a reasonable investor to understand the nature, importance, and limitations of the data, interpretations and conclusions summarized in the technical report.”
Despite these instructions, there has been a trend towards the inclusion of an overwhelming amount of data and detail that only experts can understand. Since the introduction of the NI 43-101 reporting format, it appears some industry executives, promoters and companies have come to believe that the NI 43-101 Technical Report, prepared for filing purposes, should attempt to describe in detail all the work and data generated for a project.
Since the inception of the NI 43-101 reporting format, Micon has seen and examined the gamut of Technical Reports from examples containing barely any useful information to those that make little attempt to summarize the work conducted on a property.
The NI 43-101 report is not intended as a data dump at the end of an exploration program, nor does it replace the documentation of a complete or preliminary feasibility study on a property with all its subordinate studies. In general, an NI 43-101 Technical Report should be a good summary of the scientific and technical material concerning exploration, development and production on an issuer’s material property whether it be an initial report on a property or a summary of the feasibility study. In most cases, the details of that work should be documented thoroughly for the company’s internal records, but not in the public disclosure. It should be further noted that the guidelines state: “Since a technical report is a summary document the inclusion and filing of comprehensive appendices is not generally necessary to comply with the requirements of the Form.”
For many exploration projects, superfluous detail is presented often to the detriment of clarity. Companies should continue to have their staff or consultants write internal reports on their exploration or operating properties which then can be used as the basis for a publicly-filed NI 43-101 report. Investors do not need to know every nuance of an exploration program, nor should they have to sort through all the details. However, they do need a summary of the significant intersections and key findings of a program or operation based upon information collected using best practices.
The preparation of separate all-encompassing reports, in addition to an NI 43-101 compliant summary as required for filing, is especially important in the case of pre-feasibility and feasibility studies. Projects at that stage of development generally involve a number of secondary in-depth investigations of particular aspects and in some cases entire volumes will be devoted to those studies.
With advanced projects, in order to trim costs, some companies try to force major studies into a single-volume NI 43-101 report with a multitude of appendices. Too often, this results in inadequate or poorly-organized backup data being available when the project reaches the stage of seeking construction financing.
Micon recommends that its clients undertake properly documented prefeasibility and feasibility studies that, once completed, can be summarized into an NI 43-101 report for the purposes of regulatory filing. Thus, the company will have all studies and technical information in one place for the purposes of conducting a due diligence review on the information, while nontechnical investors can use the summary contained in the NI 43-101 to form an opinion regarding a project’s potential value.
It is time for everyone in the industry to recognize that NI 43-101 reporting is intended to summarize a company’s exploration work or technical studies related to its properties for the express purposes of relaying this information succinctly to its investors and their advisors. An NI 43-101 report is neither a compendium of every available scrap of information, nor is it a substitute for well-documented pre-feasibility and feasibility studies.
This column is an adaptation of an article originally published by Bill Lewis on Micon’s website on Nov. 1, 2016.